For DFJ’s Steve Jurvetson, Outliers Make Best Investments

ByLizette Chapman

Mr. Jurvetson, a managing director at venture firm Draper Fisher Jurvetson, said he decided to stop investing in what he considered “frivolous” deals after getting pitched on three e-commerce pantyhose deals in less than five months back when he was focusing on mostly Internet companies during the first dot-com boom.

“Those types of deals are like crabs in the economy. They play a role, but who cares,” said Mr. Jurvetson, who said the plethora of pantyhose pitches caused him to educate himself to specialize in fiberoptics and nanotechnology. “It’s been a progression. Learning about one thing has led to another.”

So, Mr. Jurvetson–a former R&D engineer at Hewlett-Packard Co. who earned his M.Sc. in Electrical Engineering from Stanford University–began researching more futuristic concepts and found a handful that were appropriate for venture funding.

Of late, his investments have included commercial quantum computer maker D-Wave Systems Inc., Rethink Robotics Inc. and several next-generation health and energy companies using synthetic biology. Oh, and he’s invested in all three of Elon Musk’s potentially world-changing ventures; private space company Space Exploration Technologies Corp., or SpaceX, electric car company Tesla Motors Inc., and solar company SolarCity Corp.

To be sure, long-term plays in hard technology sectors involve significant risk and sometimes end up looking more like science experiments than commercial businesses. DFJ investments like those in carbon nanotube company Nantero Inc. have been a long slog, with the company refining its technology during the past decade and just now beginning to commercialize it. Others like NanoOpto Inc. simply never worked out.

Mr. Jurvetson points to successes like DFJ’s early bets in Tesla Motors and Solar City (DFJ was the first VC firm in both) and says LPs support his firm’s long-term approach.

“The LPs realize that some of these outlying ideas are good not only as an investment thesis, but because there is less competition, there is also less carnage,” said Mr. Jurvetson. “When they hit it, they can hit it big.”

Soon LPs will have a chance to reinvest, or not, in that theory. DFJ closed its last fund–the $350 million Fund X–in July 2010 and, by industry standards should be looking to raise another soon.

Mr. Jurvetson is quick to point out that he supports others in the industry, and even at his own firm, who invest in what he calls “the crack and buzz” startups iterating on the latest “SoMoLoco” (social-mobile-location) technology or whiz-bang fashion startup (not to mention that such deals often provide a quicker return on investment). But it’s not what gets him out of bed in the morning.

Increasingly, what excites him–along with robotics and artificial intelligence–is opportunities in agriculture.

“I think there’s an opportunity in synthetic meat, but now it still feels too early” to invest, he said. “Twenty years from now we will no longer be debating the inevitability of synthetic meat. We will still have steak and bacon, but it will not come from animals.”

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